As a charity, it is crucial that you make every penny count and that is why we offer our service to small charities just like yours. Gift Aid for charities is vital yet, last year, charities missed out on claiming over £500mn of Gift Aid. This is an alarming amount. This is money that is rightfully yours and so, we want to help you register for gift aid and assist you in making your HMRC gift aid claim.
Our service is aimed at helping your charity understand gift aid and what it means for you. We are on hand to help you register for gift aid and gain charity status with HMRC. Once this process has been completed, we can then guide you through the process of submitting gift aid claim forms.
What is Gift Aid? How is it calculated?
HMRC allows registered charities to claim back the basic rate tax that individual donors have already paid on their donations. This claim is Gift Aid.
Under HMRC’s Gift Aid Scheme, your charity can reclaim tax paid (normally 20%) on the amount donated by UK taxpayer. This amount is ‘grossed up’ to 25%. Therefore, it means that you can claim back 25p for every £1 donated from the government. This essentially means that your charity can enhance the value of the donation by 25% just by registering for charity status with HMRC and putting in a claim. Unbelievable, isn’t it!
How does Gift Aid Work?
Gift aid is a great way for your charity to increase its donations. Effectively, once someone decides to give a gift of money to your charity on which tax has already been paid, you can claim this tax back from HMRC. There are three important qualifying criteria that you need to look in a donation to be able to claim gift aid on it.
- Is it from an individual?
- Has the individual paid tax in the UK?
- Do you have a signed gift aid declaration for the individual?
If answers to all the above questions is YES it is an eligible donation on which you can claim gift aid. From the above list, you will notice that you cannot claim gift aid on donations received from companies and trusts. Secondly, you cannot claim more gift aid on an individual’s donation than the amount of income or capital gains tax paid. Lastly, you cannot claim gift aid if you do not hold a signed gift aid declaration even if both the first two conditions are satisfied. If the donor hasn’t completed a declaration, you may still be able to claim gift aid under the Small Donations Scheme (GASDS)
How can I claim Gift Aid?
Well, the first step for you is to register your charity for gift aid. This is the same as registering for charity status with HMRC. To do this, you will need to need to complete and submit an online form. HMRC will also ask you for copies of documents like bank statements, constitution etc. You will receive a Charity Repayment Reference number (commonly known as gift aid number) on successful registration. This can take 6-8 weeks from date of submission. If you are unsure whether your predecessors every registered for gift aid, just call HMRC Charities on 030 0123 1073 and ask.
You will then have to keep a record of all gift aid donations received from individuals. Use HMRC’s excel based spreadsheet to keep track of this if you have a limited number of donations. You will need details like names, postcodes, amounts, dates of donations etc. Click here for HMRC’s gift_aid_schedule_Template. And, don’t forget to obtain and keep safe all those gift aid declarations.
Once you have all the information ready you can login online on to you HMRC account and submit a claim. The amount of gift aid claimed should appear in your bank account in 4-6 weeks.
When Can I claim Gift aid?
Your deadline to claim Gift Aid depends on how your charity is set up. You need to claim for a donation within 4 years of the end of the financial period you received it in. This means
the tax year (6 April to 5 April) if you’re a trust and your accounting period if your charity. For example, for donations received in accounting year ended 31 December 2018 you should claim by 31 December 2022
Moreover, you must claim gift aid on cash donations under the Gift Aid Small Donations Scheme within 2 years of the end of the tax year that the donations were collected in.
How can we help?
Our experience and knowledge of all things Gift Aid will allow us to help you submit the correct Gift Aid declaration forms and even understand the special rules that surround claiming Gift Aid. Of course, as a registered charity, you have a duty by law to ensure that your Gift Aid claims are submitted correctly and that is where we can help to make a difference.
Our service is designed to help you navigate your way through what might seem like an endless amount of paperwork relating to Gift Aid but we are here to take care of that. We want your charity to benefit from Gift Aid and we want to ensure that your charity claims for Gift Aid in the correct way.
For more information about our Gift Aid service, why not get in touch with us? We will be more than happy to assist you in every way possible. If you would like to know about other services we offer click here.